Recent data suggest that hypoxia and its principal molecular signature HIF-1 (hypoxia-inducing factor-1) may tune down inflammation by dictating anti-inflammatory programs. We tested the effects of hypoxia and HIF-1alpha on the homeostasis of naturally occurring regulatory T cells (Treg) and their transcriptional activator Foxp3. Hypoxia induced a time-dependent increase in HIF-1alpha in mouse and human T cells. Hypoxia upregulated the expression of Foxp3 in Jurkat T cells, human and murine mononuclear cells. The effects of hypoxia on Foxp3 expression were HIF-1alpha-dependent as they were abolished upon transfection with short-interfering RNAs for HIF-1alpha and promoted by HIF-1alpha overexpression. Hypoxia increased the potency of Treg, as hypoxic CD4(+)CD25(+) lymphocytes were more effective than normoxic cells in suppressing the proliferation of CD4(+)CD25(-) effectors. In vivo expression of HIF-1alpha achieved by hydrodynamic injection of the respective naked DNA similarly induced an increase in Foxp3 expression and an increase in the number of functionally active Foxp3(+)CD4(+)CD25(+) Treg. Thus, hypoxia dictates an anti-inflammatory program by driving expression of HIF-1alpha that acts to increase the number and suppressive properties of naturally occurring CD4(+)CD25(+) Treg.